Despite two interest rate hikes on the horizon and tighter lending conditions, Australian property prices are broadly forecast to keep rising in 2026. The story isn't uniform across the country, though. Some cities are in clear boom conditions while others are barely moving. Here's what the major forecasters are saying, and what it means if you're buying or thinking about buying this year.
The Overall Picture
The combined capital city median house price is forecast to rise by approximately 6% in 2026, according to analysis from KPMG. Unit prices are forecast to increase by around 5% nationally over the same period. These figures represent continued growth despite the February rate hike and the possibility of a second hike in May.
The driver is a persistent imbalance between supply and demand. Construction activity has not kept pace with population growth, and the shortage of available properties in many markets is keeping prices supported even as borrowing costs rise.
City-by-City Forecasts
Perth
Perth is the standout market in 2026, with house prices forecast to grow by up to 13% according to some analysts. Perth has benefited from strong interstate migration, a tight rental market, and relative affordability compared to Sydney and Melbourne. The pace of growth is expected to slow in 2027, but 2026 is shaping up as another strong year.
Brisbane
Brisbane is forecast to see house price growth of around 9% to 11% in 2026, driven by continued migration into Queensland and constrained housing supply. Brisbane remains one of the more affordable capital cities for the level of economic activity it supports, which continues to attract buyers priced out of the southern markets.
Adelaide
Adelaide has been one of the stronger performers over the past three years and is expected to continue growing solidly in 2026. Affordability relative to other capitals has driven demand, and housing supply remains tight. Some forecasters place Adelaide in a similar category to Perth and Brisbane in terms of growth momentum.
Sydney
Sydney forecasts diverge more than other cities, ranging from around 2.5% to nearly 7% depending on the forecaster and whether you're looking at houses or units. Sydney is more sensitive to interest rate changes than other markets given the size of the average loan. A second rate hike in May could weigh on sentiment and activity, particularly at higher price points.
Melbourne
Melbourne is expected to be the most subdued major market in 2026, with some forecasters predicting growth of around 2% before the pace picks up in 2027. Melbourne has faced headwinds from land tax changes for investors and higher vacancy rates in parts of the city. The market is recovering but from a lower base than the other capitals.
What Rate Hikes Mean for Property Prices
Rate hikes reduce borrowing capacity, which in theory reduces how much buyers can pay. In practice, the effect on prices depends on supply. In cities where supply is severely constrained (Perth, Brisbane), the demand pressure is strong enough to absorb some reduction in borrowing capacity. In cities with more supply or more investor sensitivity (Melbourne, parts of Sydney), rate hikes carry more weight.
If the second May hike materialises, the most likely effect is a softening in transaction volumes rather than significant price falls, at least in the near term.
What This Means If You're Buying in 2026
If you're waiting for prices to fall before buying in Perth or Brisbane, the forecasts suggest that may be a long wait. In those markets, the cost of delay, higher prices and rising rents, may outweigh the benefit of waiting for rates to potentially ease.
If you're buying in Melbourne or Sydney, the picture is more nuanced, and the type of property and location matters significantly. A broker can help you understand the borrowing capacity implications of the current rate environment alongside any market-specific considerations for where you're buying.
Understand What You Can Borrow Before You Start Looking
With rates having moved and more potential movement ahead, it's important to get a clear, current borrowing assessment before you start making offers. The amount you could borrow six months ago may not be the same today.
At Swish, we assess your borrowing capacity using real lender criteria, not generic calculators, so you know exactly what price range to focus on. Book a free call with Swish and we'll give you a clear picture of where you stand in the current market.